In export finance, transaction parties are located in countries different from another. These so-called ‘cross-border’ transactions are normally governed by (and subject to) the lenders law. A process agent may be required when a transaction party does not have a physical presence in the lenders country and the transaction is subject to its law. Understanding the role of the process agent, and what is involved in appointing a process agent, can help avoid costly delays in the closing of a cross-border transaction.
Why is a process agent needed?
In order to start court procedures correctly, it is necessary to serve court papers to the relevant transaction party. If a transaction party does not have a physical presence or address within the lenders country, process for serving these court papers can be very lengthy and cumbersome, as they will have to be served abroad (where the relevant transaction party has its presence). It is therefore a market standard, and in many instances a requirement by transaction parties, that each transaction party with no presence or representation in a lenders country appoints a process agent there, and agrees that service at the address of its process agent will constitute proper service for the purposes of the court procedures.
When is a process agent needed?
The role of a process agent can be vital for cross-border transactions under foreign law.
When any of the transactions parties are not present or represented in a country, they may
need a process agent. Cross-border transactions that are frequently subject to foreign law
are loans (bilateral or syndicated), swaps (ISDA), credit facilities, leasing agreements, and
other types of funding instruments. For instance, assume a borrower located in Brazil receives a loan subject to German law. The lender would typically require the Brazilian borrower to appoint a process agent in Germany in order to receive court papers on behalf of the Brazilian borrower, should court proceedings become necessary. In addition, a process agent can also act in a broader capacity for the appointing company, including acting as a process agent for receiving documents in connection with arbitration proceedings and receiving notices under contracts where an independent party is needed.
What is important when appointing a process agent?
When choosing a process agent, it is not only important to engage someone that will
respond to your request quickly to set up the initial appointments, but one that understands
their role once appointed. A professional process agent will provide immediate notice of
receipt of any legal proceeding and will maintain an accurate database of its process agent
appointments and current contact information.
We are serving as process agent related to export finance transactions.
Feel free to ask us.